Writ not maintainable for contractual foreclosure premium disputes with state financial corporations absent arbitrariness.

JUDGMENT

Dated this the 25^th day of February, 2026

1. The Petitioner has filed this Writ Petition seeking direction to the Respondent to refund the foreclosure premium of Rs.49,08,564/- (Rs.41,59,800/- + GST) with interest at the rate of 10% from the date of levy till the date of payment.

2. The Petitioner had availed two loans from the Respondent No.1 on 18.03.2022 and 31.10.2022 for the amounts of Rs.24.50 Crores and Rs.2 Crores. The loan was taken over by ICICI Bank on 06.12.2024 before the expiry of the repayment to the Respondent. The Respondent charged 2% of the loan amount as foreclosure premium. According to the Counsel for the Petitioner, the Respondent, being a State, has to act in a fair and transparent manner. There is clear arbitrariness and illegality in charging foreclosure premium at the rate of 2% from the Petitioner. The learned Counsel relied on the decision of the Hon’ble Supreme Court in ABL International Ltd. and Another v. Export Credit Guarantee Corporation of India Ltd. and Others [(2004) 3 SCC 553] to substantiate the point that even in a contractual matter, this Court can entertain the Writ Petition against the instrumentality of the State.

3. On the other hand, the learned Counsel for the Respondents made submissions opposing the prayers with reference to the contentions raised in the Counter Affidavit filed by the Respondents. Learned Counsel for the Respondents contended that the dispute arises out of a contract between the Petitioner and the Respondents, and the same could not be agitated in a Writ Petition filed by the Writ Petitioner. The learned Counsel invited my attention to Exts.P2 and P3 Sanction Letters and Ext.P4 Loan Agreement, which contains a specific clause that in case of closure of the loan before the expiry of the loan period, the borrower has to pay foreclosure premium as per the prevailing rules of the Corporation. Learned Counsel further pointed out that the prevailing rules are Ext.R2(a), in which the percentage of the premium is fixed as 2%.

4. The learned Counsel for the Petitioner in reply contended that, at any rate, the percentage of foreclosure premium was not stated in Exts.P2, P3, and P4. The Ext.R2(a) is an internal document which is not available to the Petitioner. Even though the Petitioner requested a copy of the relevant rules of the Corporation with respect to the rate for charging the foreclosure premium as per Ext.P7, the same was not furnished to the Petitioner. In such case, Petitioner is not bound to pay the foreclosure premium.

5. I have considered the rival contentions.

6. The Petitioner has closed the loans availed from the Respondents on 06.12.2024 by availing financial assistance from another Bank. The Respondents have collected foreclosure premium from the Petitioner on the closure of the loans. Exts.P2 and P3 Sanction Letters and Ext.P4 Loan Agreement contains a specific clause that the Petitioner has to pay foreclosure premium on closure of the loan before the expiry of the loan period. In such case, the Petitioner ought to have inquired about the rate of foreclosure premium before the closure of the loans. Ext.P7, seeking details of the relevant rules, was sent by the Petitioner to the Respondent No.2 only on 22.07.2025, after the closure of the loans. It is true that Ext.R2(a) is an internal document. The Petitioner ought to have requested for Ext.R2(a) from the Respondents before the closure of the loans in order to understand the impact of the foreclosure premium of the loan account. In ABL International (Supra), it is held that in appropriate cases, this Court can interfere in contractual matters also. I find that this is not a fit case to interfere under Article 226 of the Constitution of India as